This amount of badness is background radiation. You could scrape together at least this much about any public company.
After recently starting to use them again I'm blown away at how useful and engaging the app is. But the revenue just seems to be hobbling along considering their scale.
They've tried so many models and none really stuck like AdWords for Google. Long term I just don't see the same kind of revenue growth that companies like Google and Amazon have had and continue to have. For any investor in public companies that's kind of terrifying when it's not clear how revenue will grow.
I often hear this on HN and from other techies. I bet you've never ran a serious Facebook or any other Ad campaign and measured effectiveness (in terms of business ROI).
I used to think like you, but they do work (even 0.05% click thru rate is considered effective!) and hence these companies make billions of dollars. Please stop making such ignorant statements. $3 billion revenue is not a small number.
I bet within the next 24 months, Facebook launches their content network ad platform and it will be the first true competitor Google will need to deal with simply because of Facebook's massive scale.
The reason it works for Facebook is because of the amazing (scary) imformatiom they have on their users. But it can be put to good use.
The only "theory" I can think of that would explain Facebook ad revenue as a temporary phenomenon is businesses trying it out or trying to get in early in anticipation of the ad platform improving. I don't buy that though, not at this point. I wish I understand the economics of it better.
http://news.ycombinator.com/item?id=439302
I'm working on a project that has some similarities to what you guys were discussing. Could we connect via email? You can reach me on stefan-at-wantr.com. Cheers.
Point to another public company that has a P/E ratio as high Facebook that is missing earnings estimates. Nobody is claiming the company is going to fall apart tomorrow, but if growth is slowing already then they certainly aren't worth $100BB, or anywhere close.
I don't know how bad this really is, and we are still in a shaky economic climate. But if we assume that the information being reported is true, this is pretty bad. As the article suggests, they're applying some "quick fixes" to crank up the ad spends. Is that the best they can do?
The reason they don't miss earnings is that the expectation is so low. It doesn't matter, they're the 'cloud'.
According to GAAP rules, CRM's EPS was negative, so their P/E is undefined.
http://www.google.com/finance?q=NYSE:CRM
http://www.webpronews.com/salesforce-earnings-company-beats-...
Probably not the place for this, but I wouldn't touch CRM with a ten-foot pole. Read through the earnings report and look at all the fancy, non-GAAP accounting tricks they use, like booking deferred revenue. Remember when Zynga played those games? Pretty shady, in my opinion.
But, I'm no expert.
That said, Facebook is, for better or worse, the biggest thing this industry has seen in a while. So that fact these rumours are being discussed in earnest, rather than "Facebook is still on such an insane revenue growth path that anyone who claims otherwise is an idiot" is substantial.
The statement is self-refuting.
I've said it here before, but I think many of the tech and app companies are grossly overvalued simply because the market can be so easily upset. If newcomers can get such positive projections, then surely they must be perceived as a viable risk to the big companies.
Facebook specifically is grossly overvalued because as long as they are making all their money from ads, their revenue comes from the amount of time people spend staring at a Facebook page, and this might be at its peak. True, there are more ways to make money, but there are more risks as well. Please, let's spare ourselves another bubble.
Do you not buy insurance? Do you buy lots of Powerball tickets when the jackpot gets large enough to make the average return exceed their cost?
Do you not buy insurance?
I have insurance against catastrophic events, because incurring $100,000 in medical expenses is more than 100 times as bad as spending $1000 in premiums. I don't buy extended warranties.
Do you buy lots of Powerball tickets when the jackpot gets large enough to make the average return exceed their cost?
No, because winning $100 million isn't 100 times as good as winning $1 million.
That's not to say a competitor won't emerge, and users won't switch to that competitor if Facebook really mucks up its UX in some unforgivable way. But we should bear in mind that Facebook users aren't just going to jump overboard into the ocean. If they're going to jump ship, it'll be because a better ship has pulled up alongside it.
Revenue challenges? Facebook's got plenty of time to figure those out, and meanwhile, Facebook Connect seems like a pretty powerful weapon of mass monetization in the making.
A lot of the anti-Facebook sentiment out there right now reads like wishful thinking.
I don't claim to know nearly enough about economics to even have an opinion on this subject, I'm just saying that I thought the question the article was asking was more about the economic value of Facebook (and, by extension, social networks, though, this extension may be pushing it), than it was about whether or not some competitor would be able to "dethrone Facebook", as it were.
Of course pushing for more profit could turn off users. Google+ though is showing how hard it is right now though to make a significant dent as an opposing social network.
As long as Facebook don't do anything stupid I find it hard to see how they will be beaten with a similar model. It is more likely that something else will be built which changes the whole social networking paradigm and makes Facebook less relevant.
Looking at worst case numbers it looks like Facebook will be close to 'accumulating cash' mode at the outset. That is a pretty good thing.
Now it would be nice to get some more visibility into their execution against advertising system changes but this reads more like a 'place' piece where the author hopes that if things go good people will forget they ever read it, and if they go really bad he'll be on record early 'predicting' it and will be able to demand huge consulting fees :-)
Of course I have no idea behind the motivations of the author, I just wondered how he can look at $5B in revenue and not be "well ok, their model is working at least."
> "note: ads are not the only way FB can make money"
Facebook still has at least one massive hand to play, and they tipped it in the documents outlining their agreements with Zynga. Those documents stated that if Zynga created a first party site to host their games, Facebook would be the ones to provide ads for the pages. If they were to roll out an AdSense competitor which uses personal data rather than contextual to place ads on publisher sites it could be a huge win.
I don't disagree that Facebook's prospects look extremely strong, but I do think that their decision to IPO now was wrong and potentially sets up a poisonous precedent for how they run and manage their business.
Facebook is still figuring out how to properly grow their revenue model, and now they'll be faced with the very public distractions of being a public company. Not only that, it opens up all kinds of intelligence for competitors.
I think that Mark and his team are in for one heck of a ride this year. And it isn't going to be fun.
As far as a historical account is concerned, you're more correct, but not entirely so. Suetonius mentions that some claim Julius Caesar uttered those words as he died, however his ultimate conclusion was that Caesar, in fact, uttered nothing in death. Plutarch, the other relavant historical account of what happened, came to the same conclusion.
I'd have to say that they're probably right, or are at least in a better position to say what happened than us ;)